“The economy remains very strong but CRE pricing remains languid,” said Ten-X Chief Economist Peter Muoio. “While the Nowcast has shown gains for most of the year, the increases have been modest and mixed across segments and regions, highlighting pockets of weak demand or increasing supply that are pressuring fundamentals.”

Compared to July 2017, the Ten-X CRE Nowcast posted a modest 0.3 percent increase. July marked the first month in which the index has seen a year-over-year increase since April 2018. Prior to the past three months of year-over-year decline, the index had posted continuous growth since its inception in January 2011.

Similar to June, July’s month-over-month pricing gains were once again buoyed by the office segment, which saw its pricing jump another 1.0 percent. The remaining segments continued to meander with industrial and apartment posting slight pricing gains while retail and hotel modestly declined.

The Ten-X Office Nowcast increased 1.0 percent in July and following last month’s 1.2 percent increase, the index now measures a robust 4.4 percent higher than a year ago. According to Situs survey data investor sentiment was mixed though Ten-X transaction data shows investors were more bullish in July, relative to prior months. Pricing gains were concentrated in the West, Southwest and Southeast with the Northeast and Midwest posting declines.

The Ten-X Hotel Nowcast continues to waffle between growth and decline, posting a 0.1 percent pricing decrease in July after increasing 0.4 percent in June. This brings the Nowcast to 0.8 percent lower than a year ago. US level occupancy rates and RevPAR growth are holding steady but concerns continue to mount as supply additions pick up. With hotel fundamentals highly correlated to U.S. economic conditions, the market will likely thrive as long as the labor market and GDP continue to grow. No regions posted any particularly noteworthy pricing movement in July and the Situs/RERC survey found that investor sentiment was predominately negative. Ten-X transaction activity paints a more mixed picture with regard to investor sentiment.

The Ten-X Retail Nowcast’s run of nine straight months of growth came to a halt in July as the index fell 0.8 percent. Pricing declined across almost every region except the Midwest with the Northeast and Southwest posting the heaviest declines at 1.4 percent and 1.3 percent respectively. Ten-X platform transaction trends indicated positive investor sentiment across the board, though the Situs survey found investor sentiment to be negative.

The Ten-X Industrial Nowcast found that pricing increased 0.2 percent in July after three months of decline. However, the Ten-X Industrial Nowcast is still down 4.1 percent year-over-year. Similar to previous months, prevailing sentiment and recent fundamentals in the sector are strong, yet the pricing climate continues to show weakness. Pricing trends were sharply split across regions with the Southeast and Midwest posting decent pricing increases and the remaining regions posting pricing declines. While Google search activity spiked this month, it is not an indication of future pricing growth as the recent bouts of back-and-forth tariffs with China will likely have a significant impact on the sector’s future.

The Ten-X Apartment Nowcast was one of the only other segments to post growth this month, with pricing increasing a modest 0.1 percent. Though pricing increased in July, the index is now 1.1 percent lower than a year ago. Vacancies continued to climb across major apartment markets as new supply additions became available. The sharpest pricing declines came from the Northeast and West, where many of the markets with the highest supply risk are, while the strongest increases came from the Southeast and Midwest. Google search trends and Situs survey data both show that investor sentiment is negative toward the apartment sector, though Ten-X platform transaction activity shows more mixed investor sentiment.

“Though the risk of a trade war continues to loom and investors continue to wonder if the cycle is near its peak, overall pricing trended upward again marking the sixth month of increases since February,” said Muoio. “The Ten-X Commercial Nowcast’s increases over much of this year suggest that the disconnect between seller and buyer pricing expectations that constrained deals and pricing in 2017 has strted to narrow.”

About the Ten-X CRE Nowcast

The Ten-X CRE Nowcast is a price index covering the entire U.S. commercial market, including individual price trends for each major market sector – office, multifamily, retail, industrial and hotel. It is based on data modeling developed by Google Chief Economist Hal Varian, who defines “nowcasting” as “contemporaneous forecasting” – the ability to predict what is happening as it occurs. Ten-X applies Varian’s theories by combining publicly available and anonymous Google Trends data with its own proprietary transactional data to create a model for accurately predicting current commercial real estate activity. This data is supplemented with “real human” input through the company’s partnership with Situs and their Real Estate Research Report (RERC).

Ten-X issues its CRE Nowcast monthly after combining transactional data, related online search activity indicating purchase intent and investor survey results. The company runs multiple versions of the Nowcast model and layers in additional variables every day to improve its accuracy in predicting pricing trends across CRE sectors in key U.S. markets. Future iterations will include regional, local and individual asset-based price indicators. By analyzing current market conditions as opposed to only historical data, Ten-X is able to provide more relevant and timely insight to real estate investors, economists and government entities alike.

About Ten-X Commercial

Ten-X Commercial is the nation’s leading online and only end-to-end transaction platform for commercial real estate. Since 2009, the company has sold more than $20 billion in commercial real estate. The company blends data-driven technology with industry expertise to accelerate close rates and streamline the entire transaction process. Ten-X Commercial and its parent company, Ten-X, are headquartered in Irvine and Silicon Valley, Calif., with offices in key markets nationwide. Investors in the company include Thomas H. Lee Partners, L.P., CapitalG (formerly Google Capital) and Stone Point Capital.